Euro Zone Consumers Raise Long-Term Inflation Expectations to New High

Consumer Inflation Expectations in the Euro Zone

FRANKFURT, Jan 30 (Reuters) - Euro zone consumers raised their longer-term inflation expectations to a record high in December, a European Central Bank poll showed on Friday, implying prices were seen growing faster than the ECB's target pace for years to come.

ECB President Christine Lagarde and colleagues have been saying for months the central bank for the euro zone is "in a good place" after seeing inflation fall to its 2% target, and market expectations remain largely anchored around that level.

But the ECB's latest Consumer Expectations Survey showed households had nudged up their inflation expectations five years ahead to 2.4% in December, the highest reading since the survey began in 2022 and a 20-basis-point increase from November.

Current Inflation Forecasts

The median respondent saw inflation at 2.8% over the next 12 months, unchanged from November, and at 2.6% in three years' time, up from 2.5% a month earlier.

ECB Policy Implications

Still, ECB policymakers, who use these findings in their policy deliberations, could take comfort in the fact that consumers still expected inflation to come down over the poll's time horizon.

The ECB is expected to hold its policy rate unchanged at 2% for the foreseeable future, but uncertainty relating, among other factors, to U.S. President Donald Trump's unpredictable economic policy has kept investors and policymakers on tenterhooks.

(Reporting by Francesco CanepaEditing by Peter Graff)